SCHEDULE 14A INFORMATION
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box: |_|
|_| Preliminary Proxy Statement |_| Confidential, For Use Of The Commission
Only (as Permitted By Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
--------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------------------------
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
--------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
--------------------------------------------------------------------------------
(3) Filing Party:
--------------------------------------------------------------------------------
(4) Date Filed:
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
7800 Woodley Avenue
Van Nuys, California 91406
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 13, 2005
To the Shareholders of
SUPERIOR INDUSTRIES INTERNATIONAL, INC.:
The Annual Meeting of Shareholders of SUPERIOR INDUSTRIES INTERNATIONAL,
INC. will be held at the Airtel Plaza Hotel, 7277 Valjean Avenue, Van Nuys,
California 91406 on Friday, May 13, 2005 at 10:00 A.M. Pacific Time for the
following purposes:
(1) To elect Louis L. Borick, Steven J. Borick and Raymond C. Brown to
Class III of the Board of Directors;
(2) To approve an Incentive Bonus Plan for Steven J. Borick; and
(3) To transact such other business as may properly come before the
meeting or any postponements or adjournments thereof.
Only shareholders of record at the close of business on March 28, 2005 are
entitled to notice of and to vote at the Annual Meeting. On any business day
from May 3, 2005 until May 13, 2005, during ordinary business hours,
shareholders may examine the list of shareholders for any purpose relevant to
the Annual Meeting at the Company's executive offices at 7800 Woodley Avenue,
Van Nuys, California 91406.
You are urged to execute the enclosed proxy and return it in the
accompanying envelope at your earliest convenience. Such action will not affect
your right to vote in person should you find it possible to attend the Annual
Meeting.
By Order of the Board of Directors
Daniel L. Levine
Secretary
Van Nuys, California
Dated: April 8, 2005
--------------------------------------------------------------------------------
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE MARK, SIGN, DATE AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE PAID
ENVELOPE.
--------------------------------------------------------------------------------
-2-
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
7800 Woodley Avenue
Van Nuys, California 91406
----------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 13, 2005
This Proxy Statement is furnished to the shareholders of Superior
Industries International, Inc., a California corporation ("Superior" or the
"Company"), in connection with the solicitation of proxies by the Company's
Board of Directors for use at the Annual Meeting of Shareholders to be held at
the Airtel Plaza Hotel, 7277 Valjean Avenue, Van Nuys, California 91406 on
Friday, May 13, 2005 at 10:00 A.M. Pacific Time and at all postponements and
adjournments thereof (the "Annual Meeting"). The cost of such solicitation will
be borne by Superior. The solicitation will be by mail, telephone, or oral
communication with shareholders. Following the original mailing of the proxies
and other soliciting materials, the Company will request that brokers,
custodians, nominees and other record holders forward copies of the Proxy
Statement and other soliciting materials to persons for whom they hold shares of
Superior common stock and request authority for the exercise of proxies. In such
cases, the Company will reimburse such record holders for their reasonable
expenses.
The matters to be considered and voted upon at the Annual Meeting are set
forth in the Notice of Annual Meeting which accompanies this Proxy Statement.
A proxy for use at the Annual Meeting is enclosed. A proxy, if properly
executed, duly returned and not revoked, will be voted in accordance with the
instructions contained thereon. If the proxy is executed and returned without
instruction, the proxy will be voted FOR the election as directors of the
individuals named below and FOR the approval of the Incentive Bonus Plan for
Steven J. Borick. If the proxy is not returned, your vote will not be counted.
Any shareholder who executes and delivers a proxy has the right to revoke it at
any time before it is exercised, by filing with the Secretary of Superior a
written notice revoking it or a duly executed proxy bearing a later date, or, if
the person executing the proxy is present at the meeting, by voting his shares
in person.
The approximate date on which Superior anticipates first sending this
Proxy Statement and form of proxy to its shareholders is April 13, 2005. The
address of the principal executive offices of the Company is 7800 Woodley
Avenue, Van Nuys, California 91406.
VOTING SECURITIES AND PRINCIPAL HOLDERS
There were issued and outstanding 26,626,191 shares of Superior's common
stock, par value $0.50 per share (the "Common Stock"), on March 28, 2005, which
has been set as the record date for the purpose of determining the shareholders
entitled to notice of and to vote at the Annual Meeting. Each holder of Common
Stock will be entitled to one vote, in person or by proxy, for each share of
Common Stock standing in his name on the books of Superior as of the record
date; votes may not be cumulated. To constitute a quorum for the transaction of
business at the Annual Meeting, there must be present, in person or by proxy, a
majority of the shares entitled to vote.
-3-
The following table sets forth information known to Superior as of March
1, 2005 with respect to beneficial ownership of the Common Stock by each person
known to the Company to be the beneficial owner of more than 5% of the Common
Stock, by each director, by the Named Officers (as defined under "Executive
Compensation") and by all directors and officers of Superior as a group:
Amount Percent
Beneficially Of
Name and Address(+) of Beneficial Owner Owned Class
--------------------------------------- ------------ -------
Private Capital Management (1) 4,647,710 17.5%
8889 Pelican Bay Blvd, Suite 500
Naples, FL 34108
Louis L. Borick 3,907,263(2)(3) 14.7%
Franklin Resources (1) 2,913,800 10.9%
One Franklin Way
San Mateo, CA 94403
Third Avenue Management (1) 2,778,712 10.4%
622 Third Avenue
New York, NY 10017
Artisan Partners Limited Partnership (1) 2,506,001 9.4%
875 East Wisconsin Avenue, Suite 800
Milwaukee, WI 53202
Mac-Per-Wolf Company (1) 2,364,060 8.9%
310 South Michigan Avenue, Suite 2600
Chicago, IL 60604
Juanita A. Borick 1,418,441 5.3%
Steven J. Borick 331,691(2)(3) *
James M. Ferguson 51,003(2)(3) *
Michael J. O'Rourke 42,641(2)(3) *
Raymond C. Brown 22,394(2) *
Jack H. Parkinson 16,600(2) *
R. Jeffrey Ornstein 12,175(2)(3) *
V. Bond Evans 12,000(2) *
Philip W. Colburn 9,930(2) *
Sheldon I. Ausman 5,000(2) *
Superior's Directors and Officers 4,456,722(4) 16.7%
As a Group (16 persons)
----------
+ All persons have the Company's principal office as their address, except
as indicated.
* Less than 1%.
(1) Based on information provided by the shareholder in Schedule 13G filed
with the Securities and Exchange Commission as of December 31, 2004.
(2) Includes 377,550, 217,633, 17,362, 17,362, 12,000, 9,000, 9,000, 9,000,
5,000 and 4,751 shares for Messrs. L. Borick, S. Borick, Ferguson,
O'Rourke, Evans, Colburn, Parkinson, Brown, Ausman and Ornstein,
respectively, of which they have the right to acquire beneficial ownership
through the exercise within 60 days from March 1, 2005 of non-statutory
stock options that have been previously granted.
(3) Includes 30,367, 23,263, 22,450, 21,263, and 7,124 shares for Messrs. S.
Borick, O'Rourke, L. Borick, Ferguson, and Ornstein, respectively, of
which they have the right to acquire beneficial ownership through the
exercise within 60 days from March 1, 2005 of incentive stock options that
have been previously granted.
(4) Includes 828,750 shares of which the directors and officers have the right
to acquire beneficial ownership through the exercise within 60 days from
March 1, 2005 of stock options that have previously been granted.
Excluding Mr. L. Borick, the directors and
-4-
officers beneficially own 549,459 shares, or 2.1% of the class. Each of
such directors and officers has sole investment and voting power over his
shares.
A copy of Superior's annual report on Form 10-K, as filed with the
Securities and Exchange Commission ("SEC"), will be furnished to any shareholder
without charge on written request to R. Jeffrey Ornstein, Vice President & Chief
Financial Officer, Superior Industries International, Inc., 7800 Woodley Avenue,
Van Nuys, California 91406.
ELECTION OF DIRECTORS
One of the purposes of the Annual Meeting is to elect three persons to
Class III of the Board of Directors in accordance with the Company's Articles of
Incorporation. Unless instructed to the contrary, the persons named in the
accompanying proxy will vote the shares for the election of the nominees named
herein to Class III of the Board of Directors as described below. Although it is
not contemplated that any nominee will decline or be unable to serve, the shares
will be voted by the proxy holders in their discretion for another person if
such a contingency should arise. The term of each person elected as a director
will continue until the director's term has expired and until his or her
successor is elected and qualified. The three persons receiving the largest
number of affirmative votes shall be elected as Class III directors. Since there
is no particular percentage of either the outstanding shares or the shares
represented at the meeting required to elect a director, abstentions and broker
non-votes will have the same effect as the failure of shares to be represented
at the Annual Meeting, except that the shares subject to such abstentions or
non-votes will be counted in determining whether there is a quorum for taking
shareholder action, under California law and the Company's Articles of
Incorporation and Bylaws.
The Company's Articles of Incorporation provides that its eight directors
be divided into three classes. The term of office of those directors in Class I
expires at the 2006 Annual Meeting of Shareholders; the term of office of those
directors in Class II expires at the 2007 Annual Meeting of Shareholders; and
the term of office of those directors in Class III expires at the 2005 Annual
Meeting of Shareholders. Directors elected to succeed those directors whose
terms expire are elected for a term of office to expire at the third succeeding
annual meeting of shareholders after their election.
Information Regarding Director Nominees
Messrs. Louis L. Borick, Steven J. Borick and Brown are currently serving
as directors in Class III and were elected at the 2002 Annual Meeting of
Shareholders for a term of office expiring at the 2005 Annual Meeting of
Shareholders. All the nominees were recommended for re-election by the Board of
Directors. The name, age and principal business or occupation of each nominee
and each of the other directors who will continue in office after the 2005
Annual Meeting, the year in which each first became a director of the Company,
committee memberships, ownership of equity securities of the Company and other
information are shown below in the brief description of each of the nominees and
incumbent directors and in the tables elsewhere in this Proxy Statement.
Each of the following persons is nominated for election to Class III of
the Board of Directors (to serve a three-year term ending at the 2008 Annual
Meeting of Shareholders and until their respective successors are elected and
qualified). The Board of Directors recommend that you vote FOR the following
nominees:
Louis L. Borick
Mr. L. Borick currently serves as Chairman of the Board and Chairman of
the Long Range Financial Planning Committee of the Board of Directors. He has
been Chairman of Superior's Board of Directors and President since founding the
Company in 1957, and has been responsible for the formation of the overall
corporate policy of the Company and its subsidiaries. Mr. L. Borick also served
as Chief Executive Officer of the Company until January 1, 2005, at which time,
his son, Steven J. Borick, who also serves on Superior's Board of Directors,
became the Chief Executive Officer of Superior.
Steven J. Borick
Mr. S. Borick, who is a son of Louis L. Borick, was appointed Chief
Executive Officer, effective January 1, 2005. He joined the Company in January
1999, after serving on Superior's Board for 18 years, and was appointed Vice
President, Strategic Planning on March 19, 1999, Executive Vice President on
January 1, 2000, and President and Chief Operating Officer on January 1, 2003.
Prior to joining Superior, he was engaged in the oil exploration business for
over 20 years in his capacity as President of Texakota, Inc. and
-5-
general partner of Texakota Oil Co. Mr. S. Borick also serves on the Board of
Directors of M.D.C. Holdings, Inc., a New York Stock Exchange Company. He serves
on the Long Range Financial Planning Committee of the Board of Directors of the
Company.
Raymond C. Brown
Mr. Brown retired from the Company in 1998 after a distinguished career
spanning thirty years of service. Mr. Brown joined the Company in 1967 and
became Senior Vice President in 1975. His duties included strategic and product
planning and involvement in all of the Company's major projects. He was directly
responsible for marketing and sales of products for original equipment
manufacturers and was also responsible for Corporate Quality. He serves on the
Nominating and Corporate Governance Committee of the Board of Directors of the
Company.
Selection of Nominees for Director
It is the policy of the Board, as set forth in the Company's Corporate
Governance Guidelines, to select director nominees who possess personal and
professional integrity, sound business judgment, a willingness to devote the
requisite time and energies to their duties as director, and relevant experience
and skills to be an effective director in conjunction with the full Board in
collectively serving the long-term interests of the Company's shareholders.
Board members are evaluated and selected based on their individual merit as well
as in the context of the needs of the Board as a whole.
The Nominating and Corporate Governance Committee is responsible for
identifying, reviewing, and recommending for the Board's selection qualified
individuals to be nominated for election or reelection to the Board, consistent
with the criteria set forth in the Company's Corporate Governance Guidelines.
The Nominating and Corporate Governance Committee, in conducting such
evaluation, may also take into account such other factors as it deems relevant.
Prior to nominating an existing director for re-election to the Board, the
Nominating and Corporate Governance Committee considers and reviews the existing
director's Board and committee meeting attendance and performance, length of
Board service, independence, as well as the experience, skills and contributions
that the existing director brings to the Board. Further, the Nominating and
Corporate Governance Committee receives disclosures relating to a director's
independence and assists the Board in making determinations as to the
independence of the directors. The Nominating and Corporate Governance Committee
also conducts an annual review of the composition and structure of the Board as
a whole.
From time to time, the Nominating and Corporate Governance Committee may
engage outside search firms to assist it in identifying and contacting qualified
director candidates.
Any shareholder entitled to vote in the election of directors generally
may nominate one or more persons for election as director at a meeting by
providing written notice of such shareholder's intent to make such nomination or
nominations, either by personal delivery or by United States mail, postage
prepaid, to the Secretary of the Company not later than 120 days in advance of
an annual meeting of shareholders, and with respect to an election to be held at
a special meeting of shareholders for the election of directors, the close of
business on the seventh day following the date on which notice of such meeting
is first given to shareholders. A shareholder notice must contain the following
information: the name and address of the shareholder who intends to make the
nomination and of the person or persons to be nominated; a representation that
the shareholder is a holder of record of stock of the corporation entitled to
vote at such meeting and intends to appear in person or by proxy at the meeting
to nominate the person or persons specified in the notice; a description of all
arrangements or understandings between the shareholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the shareholder; such other
information regarding each nominee proposed by such shareholder as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the SEC, had the nominee been nominated, or intended to be nominated, by the
board of directors; and the consent of each nominee to serve as a director of
the corporation if so elected. The chairman of the meeting may refuse to
acknowledge the nomination of any person not made in compliance with the
foregoing procedures, which nomination shall be void.
The directors nominated by the Board for election at the Annual Meeting
were recommended by the Nominating and Corporate Governance Committee, with the
nominees abstaining. The Board has determined that Mr. Brown is an independent
director as defined by the Corporate Governance Rules of the New York Stock
Exchange.
The Company's policies and procedures regarding the selection of director
nominees are described in detail in the Company's Corporate Governance
Guidelines and the Nominating and Corporate Governance Committee Charter, which
are available on the Company's website at www.supind.com. In addition, printed
copies of such Corporate Governance Guidelines and Nominating and
-6-
Corporate Governance Committee Charter are available upon written request to the
Company's Secretary at Superior Industries International, Inc., 7800 Woodley
Avenue, Van Nuys, California 91406.
Incumbent Directors
Directors in the other two classes of directors whose terms are not
currently expiring are as follows:
Class I -- serving until the 2006 Annual Meeting of Shareholders and until their
respective successors are elected and qualified:
Jack H. Parkinson
Mr. Parkinson has more than 55 years experience in the automotive
industry. He retired from Chrysler Corporation after 24 years in its
international organization. He was Managing Director of Chrysler's Mexico
operations from 1974 to 1982 and was Executive Vice President of Sunroad
Enterprises, an entity involved in real estate development, banking and car
dealerships, from 1983 to 1994. He serves on the Nominating and Corporate
Governance, Audit, Long Range Financial Planning and Compensation and Benefits
Committees of the Board of Directors of the Company.
Philip W. Colburn
Mr. Colburn has more than 40 years experience in the automotive industry.
Prior to the merger with Andrew Corporation in July 2003, he was the Chairman of
Allen Telecom, Inc., a New York Stock Exchange listed manufacturer of wireless
equipment to the global telecommunications industry. He held this position since
March 1988 and served as a member of the Board of Directors of Allen since 1975,
was a director of Andrew Corporation, and is currently a director of TransPro,
Inc. Mr. Colburn serves on the Audit, Long Range Financial Planning,
Compensation and Benefits, and Nominating and Corporate Governance Committees of
the Board of Directors of the Company.
R. Jeffrey Ornstein
Mr. Ornstein, a certified public accountant, joined the Company in June
1984 as Vice President, Finance and Treasurer. He became Vice President and
Chief Financial Officer in 1995. Mr. Ornstein serves as an ex officio member on
the Long Range Financial Planning Committee of the Board of Directors of the
Company.
Class II -- serving until the 2007 Annual Meeting of Shareholders and until
their respective successors are elected and qualified:
Sheldon I. Ausman
For 34 years until his retirement, Mr. Ausman was with the international
firm of Arthur Andersen, accountants and auditors. He retired as the Managing
Partner of the Southern California, Honolulu and Las Vegas offices. He also
served as a member of the firm's Board of Partners and various other committees.
Prior to reaching retirement age, Mr. Ausman served on the Board of Northern
Trust Bank of California and was a director of Allen Telecom, a New York Stock
Exchange listed manufacturer of wireless equipment to the telecommunications
industry, prior to its merger with Andrew Corporation in July 2003. He currently
is a director of several nonprofit and privately owned companies. Mr. Ausman
serves on the Compensation and Benefits, Audit, Nominating and Corporate
Governance and Long Range Financial Planning Committees of the Board of
Directors of the Company.
V. Bond Evans
Mr. Evans has over 35 years of domestic and international experience in
engineering, manufacturing and general management disciplines, primarily in the
aluminum industry. He graduated from General Motors Institute of Technology and
Management and began his career with General Motors Diesel Ltd. Canada. In 1960,
he joined Kawneer Company Canada Limited. He became President with
responsibility for Canadian and European operations in 1968. He was named
President of the parent company in 1970 with responsibility for worldwide
operations. Following the acquisition of Kawneer, Inc. by Alumax, Inc., a New
York Stock Exchange listed company, he held a succession of upper management
positions in Alumax, becoming President and Chief Executive
-7-
Officer of the company in 1991. During his career Mr. Evans served as a Director
and Committee Chairman in the Aluminum Association and the International Primary
Aluminum Institute. Mr. Evans serves on the Compensation, Nominating and
Corporate Governance and Compensation and Benefits Committees of the Board of
Directors of the Company.
The names of, and certain information with respect to, the nominees and
the incumbent directors are as follows:
First
Elected
Name Age Principal Occupation as a Director
---- --- -------------------- -------------
Nominees
Louis L. Borick 81 Chairman of the Board 1957
Steven J. Borick 52 President and Chief Executive Officer 1981
Raymond C. Brown 76 Retired Senior Vice President 1972
Incumbents
Sheldon I. Ausman 71 Partner, Cambridge Capital Partners 1992
V. Bond Evans 70 Retired President and Chief Executive Officer, 1994
Alumax, Inc.
Jack H. Parkinson 77 Retired Executive Vice President, Sunroad 1983
Enterprises
Philip W. Colburn 76 Retired Chairman, Allen Telecom, Inc. 1991
R. Jeffrey Ornstein 62 Vice President and Chief Financial Officer 1991
Committees and Meetings of the Board of Directors
The Board of Directors of the Company held five regularly scheduled
meetings in 2004. Each of the directors attended at least 75% of the aggregate
number of meetings of the Board of Directors and meetings of the committees of
the Board on which he served. Although the Company has no formal policy with
regard to Board members' attendance at its annual meetings of shareholder, it is
customary for the Company's directors to attend. All of the Company's directors
attended the Company's 2004 Annual Meeting of Shareholders. In addition to
meeting as a group to review the Company's business, certain members of the
Board of Directors also devote their time and talents to certain standing
committees. Significant committees of the Board of Directors of the Company and
the respective members are set forth below.
The Audit Committee's functions include direct responsibility for the
appointment, compensation, retention and oversight of the work of any
independent public accounting firm engaged to audit the Company's financial
statements or to perform other audit, review or attestation services for the
Company; discussing with the independent auditors their independence; review and
discussing with the Company's independent auditors and management the Company's
audited financial statements; and recommending to the Company's Board of
Directors whether the Company's audited financial statements should be included
in the Company's Annual Report on Form 10-K for the previous fiscal year for
filing with the SEC. The Audit Committee is composed of Sheldon I. Ausman
(Committee Chair), Jack H. Parkinson and Philip W. Colburn. Mssrs. Ausman,
Parkinson and Colburn are independent as that term is defined in Section 303A.02
of the New York Stock Exchange's Corporate Governance Rules and Rule
10A-3(b)(ii) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The Board has determined that Mr. Ausman is an "audit committee financial
expert" as defined by SEC rules based upon, among other things, his accounting
background and experience. The Audit Committee met four times in 2004. See
"Audit Committee Report" located elsewhere in this Proxy Statement.
The Nominating and Corporate Governance Committee's functions include
assisting the Board in identifying qualified individuals to become directors,
recommending to the Board qualified director nominees for election at the
shareholders' annual meeting, determining membership on the Board committees,
recommending a set of Corporate Governance Guidelines, oversight of annual
self-evaluations by the Board and reporting annually to the Board on the Chief
Executive Officer succession plan. The Nominating
-8-
and Corporate Governance Committee is composed of Philip W. Colburn (Committee
Chair), Sheldon I. Ausman, V. Bond Evans, Jack H. Parkinson and Raymond C Brown.
Messrs. Ausman, Evans, Colburn, Parkinson and Brown are independent as that term
is defined in Section 303A.02 of the New York Stock Exchange's Corporate
Governance Rules. The Nominating and Corporate Governance Committee met three
times in 2004.
The Compensation and Benefits Committee's functions include review and
approval of non-stock compensation for the Company's officers and key employees,
and administration of the Company's Equity Incentive Plan. The committee
consists of Sheldon I. Ausman, V. Bond Evans (Committee Chair), Philip W.
Colburn and Jack H. Parkinson. As indicated above, Messrs. Ausman, Evans,
Colburn and Parkinson are independent as that term is defined in Section 303A.02
of the New York Stock Exchange's Corporate Governance Rules. The Compensation
and Benefits Committee met twelve times during 2004. See "Compensation Committee
Report" located elsewhere in this Proxy Statement.
The Long Range Financial Planning Committee's functions include review of
the Company's long-term strategic financial objectives and the methods to
accomplish them. The committee consists of Louis L. Borick (Committee Chair),
Sheldon I. Ausman, Steven J. Borick, Philip W. Colburn, Jack H. Parkinson, V.
Bonds Evans and R. Jeffrey Ornstein as an ex officio member. The Long Range
Financial Planning Committee did not meet during 2004.
The Board of Directors has adopted a written charter for each of the Audit
Committee, the Compensation and Benefits Committee and the Nominating and
Corporate Governance Committee, which are available on the Company's website at
www.supind.com. Printed copies of these documents are also available upon
written request to the Company's Secretary, Superior Industries International,
Inc., 7800 Woodley Avenue, Van Nuys, California 91406.
Non-Management Executive Sessions
Non-management directors meet after each regularly scheduled Board of
Directors meeting, or more frequently if necessary.
Communications with Directors
Shareholders wishing to communicate directly with the Board of Directors,
the Chairman of the Board, the Chair of any committee, or the non-management
directors as a group about matters of general interest to shareholders are
welcome to do so by writing the Company's Secretary at Superior Industries
International, Inc., 7800 Woodley Avenue, Van Nuys, California 91406. The
Secretary will forward these communications as directed.
Code of Business Conduct and Ethics
The Company has adopted a Code of Business Conduct and Ethics, a code of
ethics that applies to all of the Company's directors, officers and employees,
including the Company's Chief Executive Officer and Chief Financial Officer. The
Code of Business Conduct and Ethics is publicly available on the Company's
website at www.supind.com and in print upon written request to the Company's
Secretary at Superior Industries International, Inc., 7800 Woodley Avenue, Van
Nuys, California 91406. Any amendments to the Code of Business Conduct and
Ethics or grant of any waiver from a provision of the code to any director or
officer will be disclosed on the Company's website within five days of a vote of
the Board of Directors or a designated board committee that such an amendment or
waiver is appropriate, and shall otherwise be disclosed as required by
applicable law or New York Stock Exchange rules.
Certain Relationships and Related Transactions
Superior's main office and manufacturing facilities located at 7800
Woodley Avenue, Van Nuys, California, are leased from Mr. L. Borick, who is a
director and Chairman of the Board of the Company, and Juanita A. Borick, who is
Mr. L Borick's former spouse. One of the two buildings on the property is a
casting plant containing approximately 85,000 square feet and the other is a
combined office, manufacturing and warehouse structure. The offices comprise
approximately 24,000 square feet and the manufacturing and warehouse area
236,000 square feet. During fiscal 2004, Superior paid $1,332,936 in rentals
under the lease.
Superior leases the plant and office facilities at 14721 Keswick Street,
Van Nuys, California from Keswick Properties, owned jointly by Steven J. Borick,
who is a director and officer of the Company, and two other of Mr. L. Borick's
children. During fiscal 2004, Superior paid Keswick Properties $267,670 in
rentals under the lease.
-9-
Based upon independent appraisals, the Company believes the related party
transactions described above were fair to the Company and could have been
obtained on similar terms from an unaffiliated third party.
There are no personal loans or other extensions of credit to directors or
executives.
Employment Agreements
On January 1, 2005, Superior entered into a services agreement with Mr.
Louis L. Borick as Chairman of the Board, following the termination of his
services as Chief Executive Officer under the 1994 employment agreement. The
services agreement provides for annual compensation of $300,000, use of a
company automobile, medical and dental benefits and life insurance under a split
dollar arrangement for a face value of $2,500,000. Effective January 1, 2005,
Mr. Borick will also be receiving, per the terms of his 1994 Chief Executive
Officer employment agreement, one-twelfth of his annual base compensation as of
December 31, 2004, during each of the ensuing 60 months and one-half such amount
during each of the 120 months following. Mr. L. Borick's annual base
compensation on December 31, 2004 was $1 million. See "Compensation Committee
Report" located elsewhere in this proxy statement for more discussion regarding
Mr. L. Borick's compensation.
Effective January 1, 2005, Superior entered into an employment agreement
with Mr. Steven J. Borick as President and Chief Executive Officer. The
agreement provides for a five year term, a minimum annual base compensation of
$750,000, equity compensation commencing March 1, 2006 in the form of an annual
stock option grant at fair market value of 120,000 shares per year, an
automobile allowance, life insurance and other customary employee benefits. Upon
an early termination of the agreement by the Company without cause, Mr. S.
Borick will receive one year's base compensation in the form of twelve monthly
payments. Upon Mr. S. Borick's termination of employment due to a "change in
control", as defined in the agreement, Mr. S. Borick shall receive three years
base compensation in the form of thirty-six monthly payments. An incentive bonus
plan is being proposed for Mr. S. Borick, as outlined in Proposal 2 in this
proxy statement.
Salary Continuation Benefits
The Company entered into agreements with its directors, executive officers
and certain of its key employees, which provide for Superior to pay to the
individual, upon ceasing to be employed by the Company for any reason, after
having reached specified vesting dates (not payable until age 65), or in the
event of death while in the employ of the Company prior to separation from
service, a monthly benefit up to 30% of the individual's final average
compensation over the preceding 36 months. Such payments are to continue through
the later of 120 months or, if subsequent to retirement, the individual's death.
Final average compensation only includes base salary for employees and
directors' fees for non-employee directors.
Compensation of Directors
During 2004, all non-employee directors of the Company were each
compensated $25,000 for services as directors and $1,000 for each Board meeting
attended. In addition, they receive $1,000 for each committee meeting attended
or $1,500 for each committee meeting chaired. Management members of the Board of
Directors are not compensated for their service as directors.
EXECUTIVE COMPENSATION
The following table shows information concerning the annual and long-term
compensation for services in all capacities to the Company for the fiscal years
2002 through 2004 of those persons who were, at December 31, 2004, (i) the chief
executive officer and (ii) the other four most highly compensated executive
officers of the Company (the "Named Officers").
-10-
Summary Compensation Table
Long-Term
Annual Compensation(1) Compensation-
Fiscal ------------------------ Number of Stock All Other
Name and Principal Position Year Salary Bonus Options Compensation(2)
--------------------------- ------ ----------- ----------- --------------- ---------------
Louis L. Borick 2004 $ 1,000,000 $ 750,000 -0- $197,249
Chairman of the Board 2003 1,000,001 1,892,000 -0- 145,153
(and Chief Executive Officer through December 31, 2004) 2002 1,000,001 2,581,000 -0- 99,605
Steven J. Borick 2004 $ 648,462 $ 487,500 100,000 $ 18,602
President and, commencing January 1, 2005, 2003 595,979 650,000 200,000 6,766
Chief Executive Officer 2002 430,914 500,000 50,000 2,000
R. Jeffrey Ornstein 2004 $ 247,250 $ 150,000 2,500 $ 6,026
Vice President and Chief Financial Officer 2003 246,349 200,000 5,000 6,000
2002 241,883 200,000 5,000 6,000
James M. Ferguson 2004 $ 226,013 $ 93,750 7,500 $ 6,026
Senior Vice President, 2003 223,572 125,000 15,000 6,000
Global Sales and Marketing 2002 212,163 120,000 10,000 6,000
Michael J. O'Rourke 2004 $ 169,707 $ 120,000 7,500 $ 5,504
Senior Vice President, 2003 167,891 160,000 15,000 6,000
Sales and Administration 2002 156,770 150,000 10,000 6,000
------------
(1) While the executive officers enjoy certain perquisites, such perquisites
do not exceed the lesser of $50,000 or 10% of such officer's salary and
bonus, and, accordingly, are not reflected on this table.
(2) These amounts represent the Company's contributions to the employee
retirement savings plans covering substantially all of its employees. In
fiscal 2004, the contribution for Mr. L. Borick was $6,027, and the
contirbution for Mr. S. Borick was $2,050. That year Mr. L. Borick also
received $185,070 in reimbursement of premiums paid for life insurance,
and $6,152 in non-cash benefits for the use of corporate aircraft, and Mr.
S. Borick received $16,552 in non-cash benefits for the use of corporate
aircraft.
Equity Compensation Plan Information
The following table sets forth information relating to equity securities
authorized for issuance under the Company's equity compensation plans as of
December 31, 2004.
Number of securities
remaining available for
Number of securities to be Weighted-average future issuance under equity
issued upon exercise of exercise price of compensation plans
outstanding options, outstanding options, (excluding securities reflected
Plan Category warrants and rights warrants and rights in column (a))
------------------------------------ -------------------------- -------------------- -------------------------------
(a) (b) (c)
Equity compensation plans approved
by security holders
Stock options (1)................... 1,799,592 $ 32.32 2,430,000
Equity compensation plans not
approved by security holders......... 0 N.A. 0
---------- -------- ----------
Total................................... 1,799,592 $ 32.32 2,430,000
========== ======== ==========
---------------
-11-
(1) Consists of shares of Common Stock to be issued upon the exercise of
options granted pursuant to the Company's 1993 Stock Option Plan and 2003
Equity Incentive Plan.
Option Grants
The following table shows information on grants of stock options during
the fiscal year 2004 to the Named Officers.
Potential Realizable Value
Number of Percentage of at Assumed Annual Rates of
Securities Total Options Stock Price Appreciation for
Underlying Granted to Exercise Price Option Term(3)
Options Employees in or Base Price Expiration ----------------------------
Name Granted(1) Fiscal 2004 Per Share(2) Date 5% 10%
-------------------- ----------- ------------- -------------- -------------- ---------- -----------
Louis L. Borick ...... -0- N/A N/A N/A -0- -0-
Steven J. Borick ..... 100,000 54.4% $ 34.08 4/30/14 $2,143,273 $5,431,474
R. Jeffrey Ornstein .. 2,500 1.4% 34.08 4/30/14 53,582 135,787
James M. Ferguson .... 7,500 4.1% 34.08 4/30/14 160,745 407,361
Michael J. O'Rourke .. 7,500 4.1% 34.08 4/30/14 160,745 407,361
----------
(1) All options granted are exercisable in cumulative equal installments
commencing one year from date of grant, with full vesting on the fourth
anniversary date. Vesting may be accelerated in certain events relating to
the change of the Company's ownership or certain corporate transactions.
(2) All stock options were granted at market value at the closing price of the
Common Stock on the date of grant.
(3) Reported net of the option exercise price. These amounts represent certain
assumed rates of appreciation only. Actual gains, if any, on stock option
exercises are dependent on the future performance of the Common Stock,
overall stock conditions, as well as the option holders' continued
employment through the vesting period. The amounts reflected in this table
may not be indicative of the value that will actually be achieved or
realized.
Option Exercises and Fiscal Year-End Values
The following table shows information with respect to stock options
exercised during fiscal year 2004 and unexercised options to purchase the Common
Stock for the Named Officers.
Number of Unexercised Value of Unexercised,
Options Held At In-the-Money Options
Shares December 31, 2004 At December 31, 2004(2)
Acquired on Value -------------------------- ---------------------------
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
---- -------- ----------- ----------- ------------- ----------- -------------
Louis L. Borick ........ -0- $ -0- 400,000 50,000 $872,500 $ -0-
Steven J. Borick ....... -0- -0- 223,000 282,500 277,340 -0-
R. Jeffrey Ornstein .... -0- -0- 11,250 10,000 6,585 -0-
James M. Ferguson ...... 5,000 16,750 36,750 26,250 85,058 -0-
Michael J. O'Rourke .... -0- -0- 38,750 26,250 96,685 -0-
----------
(1) Represents the difference between the market value on the date of exercise
and the option exercise price.
(2) Represents the difference between the market value at December 31, 2004
and the option exercise price.
-12-
COMPENSATION AND BENEFITS COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Ausman, Colburn, Evans and Parkinson served on the Compensation
and Benefits Committee from January 1, 2004 to December 31, 2004. No member of
the Compensation Committee was an officer or employee or former officer or
employee of the Company or its subsidiaries and no member has any interlocking
relationships with the Company that are subject to disclosure under the rules of
the SEC relating to compensation committees.
PROPOSAL 2
APPROVAL OF AN INCENTIVE BONUS PLAN FOR STEVEN J. BORICK
(Item No. 2 on Proxy Card)
At the Annual Meeting, shareholders are being asked to approve the
adoption of an Incentive Bonus Plan for Steven J. Borick (the "CEO Bonus Plan").
The Plan has been adopted by the Company's Board of Directors. Steven J. Borick
was unanimously confirmed by the Board as CEO of the Company effective January
1, 2005.
The Board is seeking shareholder approval of the CEO Bonus Plan in order
for bonuses paid under the CEO Bonus Plan to constitute performance-based
compensation under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"). If such bonuses constitute "performance-based
compensation", they will not be subject to the $1,000,000 cap on deductible
compensation under Section 162(m) of the Code.
Description of the Bonus Plan
The following information includes a summary of the material
provisions of the CEO Bonus Plan. This information does not purport to be
complete and is qualified in its entirety by reference to the provisions of the
CEO Bonus Plan. A copy of the CEO Incentive Plan is attached to this Proxy
Statement as Exhibit A.
The purpose of the CEO Bonus Plan is to provide Mr. Steven Borick an
additional incentive to continue the extraordinary efforts, initiative and
judgment he has exercised on behalf of the Company and its shareholders by
establishing his yearly bonus on a specific formula basis. Under the CEO Bonus
Plan, Mr. S. Borick is eligible to receive 75% of his annual base compensation
("Target Incentive") if the Company's annual Pre-Tax Net Income ("Pretax") is
equal to at least 100% of the annual plan level Pre-tax Net
-13-
Income ("Plan Level") as approved by the Compensation Committee. However, the
award is reduced such that no bonus is awarded if the Pretax is less than 66% of
the Plan Level. A pro rata interpolated rate will be awarded between 66% and
100% at a 1:1 ratio. If the annual Pretax is greater than the annual Plan Level,
Mr. S. Borick is eligible for awards that will be interpolated at a 2.0:1 ratio
up to 300% of Target Incentive with a maximum award in any event of $1,687,500.
The CEO Bonus Plan will expire by its terms on May 13, 2010 such that the CEO
Bonus Plan will only have a term of five years from the date of this Annual
Meeting, unless the CEO Bonus Plan is re-approved by shareholders.
The Compensation Committee of the Board is responsible for the
administration of the CEO Bonus Plan. The Compensation Committee consists of two
or more members of the Board, each of whom is an "outside director" for purposes
of Section 162(m) of the Code. The Compensation Committee will annually certify
whether the planned level has been achieved and what compensation is payable to
Mr. S. Borick. Mr. S. Borick's bonus award will be paid in cash.
Outside compensation consultants were engaged to review and research
competitive market salary and bonus data for the CEO Bonus Plan. Based on
multiple sources of published compensation survey data compiled by recognized
large prestigious companies in the field of compensation, even if Mr. S. Borick
were to receive the maximum payout under this plan, his total cash compensation
would fall between the 50th and 75th percentile of all salaries, meaning that
his cash compensation will fall within expected market level compensation. The
benefits that may be paid under the CEO Bonus Plan to Mr. S. Borick are not yet
determinable for the 2005 fiscal year. Mr. S. Borick would have received
$418,684 under the CEO Bonus Plan for the 2004 fiscal year if the CEO Bonus Plan
had been in effect for that year.
Vote Required and Board Recommendation
The affirmative vote of a majority of shares of Common Stock represented
and voting at the Annual Meeting at which a quorum is present, together with the
affirmative vote of at least a majority of the required quorum, shall be
required to approve this proposal. Shares of Common Stock that are voted "FOR",
"AGAINST" or "ABSTAIN" on the proposal are treated as being present at the
Annual Meeting for purposes of establishing the quorum, but only shares of
Common Stock voted "FOR" or "AGAINST" are treated as shares of Common Stock
"represented and voting" at the Annual Meeting with respect to the proposal.
Accordingly, abstentions and broker non-votes will be counted for purposes of
determining the presence or absence of the quorum for the transaction of
business, but will not be counted for purposes of determining the number
"represented and voting" with respect to the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE INCENTIVE
BONUS PLAN FOR STEVEN J. BORICK.
AUDIT FEES
The aggregate fees billed by the Company's outside auditor,
PricewaterhouseCoopers LLP, for professional services in connection with the
annual audit and reviews of the quarterly financial statements, including
recurring fees for work associated with Section 404 of the Sarbenes-Oxley Act,
during the fiscal years ended December 31, 2004 and 2003 were $544,000 and
$213,000, respectively.
AUDIT RELATED FEES
There were no fees billed by the Company's outside auditor during the
fiscal years ended December 31, 2004 and 2003 for professional services in
connection with other audit related matters.
TAX FEES
The aggregate fees billed by the Company's outside auditor for
professional tax services rendered in 2004 and 2003, were $93,000 and $193,000,
respectively. Tax fees consist of fees billed for professional services rendered
for tax compliance, advice and planning. Such services included review of tax
provisions, tax asset and liability accounts, original and amended tax returns
refund claims.
ALL OTHER FEES
There were no fees billed by the Company's outside auditor for any other
services provided by the Company's outside auditors during the fiscal years
ended December 31, 2004 and 2003, respectively.
-14-
The Audit Committee pre-approves all audit-related and all permissible
non-audit services performed by the independent registered public accounting
firm.
AUDIT COMMITTEE REPORT
The following is the report of the Audit Committee with respect to the
Company's audited financial statements for the fiscal year ended December 31,
2004, and the notes thereto.
Review with Management
The Audit Committee reviewed and discussed with management the Company's
audited financial statements for the fiscal year ended December 31, 2004 and the
notes thereto.
Review and Discussions with Independent Accountants
The Audit Committee discussed with, PricewaterhouseCoopers LLP, the
independent auditors for the Company, the matters required to be discussed by
Statement on Accounting Standards No. 61 (Communications with Audit Committees).
The Audit Committee also received and discussed with PricewaterhouseCoopers LLP
the matters required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees) including the independence of
PricewaterhouseCoopers LLP from the Company.
Conclusion
Based on the review and discussions referred to above, the Audit Committee
recommended to the Company's Board of Directors that the Company's audited
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2004.
SUBMITTED BY THE AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS
Sheldon I. Ausman - Committee Chair
Philip W. Colburn
Jack H. Parkinson
March 28, 2005
COMPENSATION COMMITTEE REPORT
The Compensation Committee (the "Committee") is composed of Messrs.
Ausman, Colburn, Evans and Parkinson, each of whom meet the independence
requirements as promulgated by the New York Stock Exchange. The Committee's
responsibilities include developing and making recommendations to the full Board
with respect to executive compensation. Also, the Committee establishes the
annual compensation of the Company's Chairman and the Company's Chief Executive
Officer ("CEO") and reviews the compensation policy related to the Company's
other executive officers. The Committee's executive compensation philosophy is
to set levels of overall compensation that will allow the Company to
successfully compete for exceptional executives, to tie part of each executive's
compensation to the success of the Company in attaining its short and long-term
objectives, and to recognize individual effort and achievement.
The Committee considers the competitiveness of overall compensation,
solely, and evaluates the performance of the executive officers and adjusts
salaries accordingly. For individuals other than the Chairman and CEO,
adjustments are made without regard to a specified formula based on subjective
recommendations of the Chairman and the CEO to the Committee of the individual
executive's performance and also take into account the profitability of the
Company. The Committee believes these criteria for salary adjustments are in
accordance with sound overall compensation guidelines.
-15-
Pursuant to this philosophy, the Committee reviews published compensation
surveys covering a wide array of public companies, both larger and smaller than
the Company. Periodically the Committee reviews the compensation paid and to be
paid to each of the Company's executive officers and receives an evaluation of
their performance from the Company's CEO. The Company's Chairman has a services
agreement, and the Company's CEO has an employment agreement, which are
discussed under "Employment Agreements."
The compensation surveys utilized for CEO compensation are published in
national magazines that contain certain of the companies comprising the peer
group (see "Common Stock Performance Graph") and include a variety of other
public companies. Compensation levels for the CEO were not solely based by
reference to peer company compensation levels.
The Committee does not specifically target a level of compensation
relative to comparative compensation data collected for the CEO or other
executive officers, but rather refers to this data for subjective review and
confirmation of reasonableness of salaries paid to executives.
In 1994, the Board of Directors and the shareholders approved an Incentive
Bonus Plan (the "L. Borick Plan") for Mr. L. Borick, the Company's Chairman who
was also Chief Executive Officer prior to January 1, 2005. The purpose of the L.
Borick Plan Bonus Plan was to provide Mr. L. Borick an additional incentive to
continue the extraordinary efforts, initiative and judgment he had exercised on
behalf of the Company and its shareholders by establishing his yearly bonus on a
specific formula basis. Under the L. Borick Plan, the amount of Mr. L. Borick's
annual bonus equaled 2.0% of the Company's annual income before income taxes and
before deducting any annual awards under the L. Borick Plan or any other
executive incentive arrangements. However, if such annual income did not equal
at least 90% of the planned level for the year, as approved by the Committee,
the 2.0% figure was reduced to 1.8%, ranging down to 1.0% at 70% of the planned
level. In no event, however, would Mr. Borick's annual bonus under the L. Borick
Plan be less than 1.0% of annual income, as defined. The Committee administered
the L. Borick Plan and determined the amount payable under it in accordance with
its terms. The Committee had the right to amend or terminate the L. Borick Plan
at any time, but could not increase the amount of bonus payable in excess of
that provided for under the L. Borick Plan formula. Mr. L. Borick elected to
received a 2004 bonus less than the bonus determined pursuant to the L. Borick
Plan. The 2004 bonus paid to Mr. L. Borick was $750,000.
In 2004, the Board of Directors and the shareholders approved an Incentive
Bonus Plan for Mr. S. Borick, the Company's Chief Executive Officer who was COO
prior to January 1, 2005 (the "COO Bonus Plan"). The purpose of the COO Bonus
Plan was to provide Mr. S. Borick an additional incentive to continue the
extraordinary efforts, initiative and judgment he has exercised on behalf of the
Company and its shareholders by establishing his yearly bonus on a specific
formula basis. Under the COO Bonus Plan, Mr. S. Borick was eligible to receive
100% of his annual base compensation if the Company's annual earnings per share
("EPS") was equal to at least 90% of the annual plan level as approved by the
Board of Directors. However, if such EPS target was not met, the award would be
reduced such that no bonus is awarded if the EPS is less than 50% of the planned
level. A pro rata interpolated rate would be awarded between 50% and 90%. If the
annual EPS was greater than the annual plan level, Mr. S. Borick would be
eligible for awards that will be interpolated up to 120% of planned level with a
maximum award in any event of $1,000,000.
The Committee had the right to amend or terminate the COO Bonus Plan at
any time, but could not increase the amount of bonus payable in excess of that
provided for under the Plan formula. The 2004 bonus paid to Mr. S. Borick
pursuant to the COO Bonus Plan was $400,015. The Committee also approved an
additional 2004 discretionary bonus to the COO of $87,485 in recognition of his
extraordinary efforts in a difficult year for the industry. Therefore, the total
2004 bonus payable to the COO amounted to $487,500, which was equal to 75% of
his 2003 bonus award.
Section 162(m) of the Code limits the ability of the Company to deduct
annual compensation paid over $1,000,000 to the Named Officers, unless such
compensation was "performance-based" as defined in Section 162(m) of the Code.
Historically, the intent of the Committee has been that compensation paid under
bonus plans qualify as performance-based compensation under Section 162(m) of
the Code. The Committee has recommended a performance-based bonus plan for Mr.
S. Borick (see "Proposal 2" on page 13 of this proxy statement) for approval by
the shareholders with the intent that the compensation paid under such plan
continues to qualify as performance-based.
The overall amount of the bonus pool is approximately 7.6% of pre-tax
income. The bonus pool is utilized for all employee bonuses including the CEO
and COO Bonus Plans. The determination as to the portion of the bonus pool
awarded to each executive, other than the Chariman and the CEO, is entirely
subjective and discretionary based on an evaluation of their performance and
contribution for the year. The Committee approved the establishment of the bonus
pool and the amount; and individual bonus awards, other than for the Chariman
and the CEO, are based on recommendations of the CEO and reviewed and approved
by the Committee.
-16-
The stock option awards to each executive, as determined by the
Compensation and Benefits Committee, are determined subjectively based on an
evaluation of their performance and contribution to the Company and also take
into account the relative financial performance of the Company without regard to
any specified formula.
Base salaries are generally reviewed no sooner than every 12 months and
adjusted when deemed necessary. The last salary review for each of the Named
Officers was as follows: Mr. S. Borick (January 1, 2005), Mr. Ornstein (March 7,
2005), Mr. Ferguson (March 7, 2005) and Mr. O'Rourke (March 7, 2005).
FURNISHED BY THE COMPENSATION AND
BENEFITS COMMITTEE OF THE BOARD
OF DIRECTORS
V. Bond Evans - Committee Chair
Philip W. Colburn
Sheldon I. Ausman
Jack H. Parkinson
March 28, 2005
Common Stock Performance Graph
The following graph compares the five year cumulative total return of the
Common Stock to that of the Dow Jones Equity Market Index and the Dow Jones
Automobile Parts and Equipment Excluding Tire and Rubber Makers Index.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
[INSERT PERFORMANCE GRAPH]
Superior Industries Dow Jones Equity Market Dow Jones Industry Group
International, Inc. Index Index
------------------- ----------------------- ------------------------
1999 100.00 100.00 100.00
2000 119.23 90.73 73.02
2001 153.82 79.92 95.52
2002 159.70 62.27 86.13
2003 170.23 81.42 122.49
2004 115.74 91.20 129.20
----------
* Assumes that the value of the investment in Common Stock and each Index
was $100 on December 31, 1999, and that all dividends were reinvested.
-17-
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act, requires Superior's officers and
directors, and persons who beneficially own more than 10% of a registered class
of Superior's equity securities, to file reports of beneficial ownership and
changes in beneficial ownership on Forms 3, 4 and 5 with the SEC and the New
York Stock Exchange. Officers, directors and greater than 10% beneficial owners
are required by SEC regulation to furnish Superior with copies of all Forms 3, 4
and 5 that they file. Based solely on Superior's review of the copies of such
forms it has received and written representation from certain reporting persons
confirming that they were not required to file Forms 5 for specified fiscal
years, Superior believes that all its officers, directors and greater than 10%
beneficial owners complied with all filing requirements applicable to them with
respect to transactions during fiscal year 2004.
SHAREHOLDER PROPOSALS FOR THE 2006 ANNUAL MEETING OF SHAREHOLDERS
Shareholders who wish to present proposals for action complying with
appropriate SEC and proxy rules at the 2006 Annual Meeting of Shareholders must
give written notice thereof to the Secretary of the Company at 7800 Woodley
Avenue, Van Nuys, California 91406. SEC rules currently require that such notice
be given by December 9, 2005 in order to be included in the Company's Proxy
Statement and form of proxy relating to that meeting. With respect to proposals
to be brought before the shareholders at the 2006 Annual Meeting of
Shareholders, the Company must have notice of such proposals by December 9, 2005
with respect to director nomination proposals, and with respect to all other
matters, by February 18, 2006, or the Company's proxy for such meeting will
confer discretionary authority to vote for such matters.
ANNUAL REPORT TO SHAREHOLDER AND FORM 10-K
AND OTHER MATTERS
Management has selected PricewaterhouseCoopers LLP as the Company's
auditors for 2005. A representative of PricewaterhouseCoopers LLP is expected to
be present at the Annual Meeting and available to respond to appropriate
questions.
Management does not know of any matters to be presented to the Annual
Meeting other than those described above. However, if other matters properly
come before the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote said proxy in accordance with their judgment on such
matters, and discretionary authority to do so is included in the proxy.
The Company's Annual Report to Shareholders, which was mailed to
shareholder with or preceding this Proxy Statement, contains financial and other
information about the Company, but is not incorporated into this Proxy Statement
and is not to be considered a part of these proxy soliciting materials or
subject to Regulation 14A or 14C or to the liabilities of Section 18 of the
Exchange Act. The information contained in the "Compensation Committee Report on
Executive Compensation", "The Audit Committee Report" and "Performance Graph"
shall not be deemed filed with the SEC or subject to Regulations 14A or 14C or
to the liabilities of the Section 18 of the Exchange Act, and shall not be
incorporated by reference in any filing of the Company under the Securities Act
of 1933, as amended (the "1933 Act"), or the Exchange Act, whether made before
or after the date hereof and irrespective of any general incorporation language
in any such filing.
THE COMPANY WILL PROVIDE WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT TO
SHAREHOLDERS FOR 2004 AND ITS ANNUAL REPORT ON FORM 10-K INCLUDING THE FINANCIAL
STATEMENTS AND THE FINANCIAL STATEMENT SCHEDULES AND EXHIBITS, FILED WITH THE
SEC FOR FISCAL YEAR 2004 TO ANY BENEFICIAL OWNER OF SUPERIOR COMMON STOCK AS OF
THE RECORD DATE UPON WRITTEN REQUEST TO SUPERIOR INDUSTRIES INTERNATIONAL, INC.,
7800 WOODLEY AVENUE, VAN NUYS, CALIFORNIA 91406 ATTENTION: VICE PRESIDENT & CFO.
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
By: Louis L. Borick,
Chairman of the Board
-18-
EXECUTIVE ANNUAL INCENTIVE PLAN
This Executive Annual Incentive Plan ("Incentive Plan"), effective as of January
1, 2005 and first applying with respect to the fiscal year ending December 31,
2005, subject to shareholder approval at the 2005 Annual Meeting of Shareholders
as described below, is between Superior Industries International, Inc.
("Superior", or the "Company") and Steven J. Borick ("Employee"). This Incentive
Plan and the performance hereunder shall be interpreted under the substantive
laws of the State of California.
1. Plan Purpose
The purpose of this Incentive Plan is to promote the success of the Company by
providing to the Employee a performance-based bonus opportunity. This Incentive
Plan operates in conjunction with, and does not supercede or amend, that certain
"Executive Employment Agreement" between the Company and Employee dated January
1, 2005 (the "Executive Employment Agreement"). However, this Incentive Plan
supersedes all previous incentive plan agreements between the Company and the
Employee.
2. Term
This Incentive Plan shall continue in place until the fifth anniversary of the
effective date, unless earlier terminated by the Board of Directors of the
Company as provided in Section 12 (such period being the "Term"). No awards
shall be paid under the Incentive Plan unless and until the material terms
(within the meaning of Section 162(m)(4)(C) of the Internal Revenue Code of
1986, as amended (including proposed, temporary and final regulations
promulgated thereunder from time to time, the "Code") of the Incentive Plan are
disclosed to the Company's shareholders and are approved by the shareholders by
a majority of votes cast in person or by proxy.
3. Compensation
Employee's total compensation consists of base salary, variable compensation (as
further defined in this Incentive Plan, and medical and other benefits generally
provided to similarly situated employees of the Company. Any compensation paid
to Employee shall be pursuant to the Company's policies and practices for exempt
employees and shall be subject to all applicable laws and requirements regarding
the withholding of federal, state, and/or local taxes. Except as provided in the
Employment Agreement, compensation provided in this Incentive Plan is full
payment for the services of Employee and Employee shall receive no additional
compensation for extraordinary services unless otherwise authorized in writing
by the Compensation Committee of the Board of Directors of the Company (the
"Compensation Committee").
Base Salary
-----------
Pursuant to the Employment Agreement, Superior has agreed to pay Employee an
annual base salary of seven hundred fifty thousand dollars ($750,000), less
applicable withholdings, payable in equal installments no less frequently than
semi-monthly.
Page 1 of 6
Variable Compensation
---------------------
Employee shall be eligible for variable compensation, subject to applicable
withholdings and subject to the terms and conditions of this Incentive Plan.
4. Executive Annual Incentive Plan Description
Commencing on January 1, 2005 and continuing each 12 months thereafter (each
such anniversary date is referred to as the "Annual Bonus Period"), during the
Term, Employee shall be eligible to receive an annual bonus (the "Performance
Bonus") of up to One Million Six Hundred Eighty Seven Thousand Five Hundred
Dollars ($1,687,500), less applicable withholdings. The Performance Bonus (if
any) will be based upon annual Company Pre-Tax Net Income achievement in
comparison to a planned level of Pre-Tax Net Income. Payments of the Performance
Bonus (if any) shall be made net of all applicable withholdings and within
seventy-five (75) calendar days following the end of the plan year (December
31). The determination of the planned level of Pre-Tax Net Income for each
Annual Bonus Period shall be made by the Compensation Committee in its sole
discretion. The determination of whether the planned level of Pre-Tax Net Income
for each Annual Bonus Period has been achieved shall be made by the Compensation
Committee, in its sole discretion.
5. Eligibility
Participation for this Incentive Plan is limited to the President and CEO
position. Employee must be actively employed with Superior Industries through
the end of the plan year to qualify for that year's payout. The last day worked
is the last day Employee is considered active. For each fiscal year of the
Company, the participant entitled to share in the benefits of the Incentive Plan
is a person who is an "executive officer" of the Company, as such term is
defined in Rule 3b-7 under the Securities Exchange Act of 1934, as amended (or
any successor rule or regulation), or who is a "covered employee" of the Company
under Section 162(m)(3) of the Code. An executive whose employment or service
relationship with the Company is terminated for any reason prior to the end of
any fiscal year of the Company will not be entitled to participate in the
Incentive Plan or receive any benefits with respect to any later fiscal year,
unless he or she again becomes eligible to participate in the Plan under the
first sentence of this Section 5.
6. Right to Receive Award
Employee must, in addition to the eligibility requirements of Section 5, receive
an overall performance evaluation equivalent to Superior's Level 3 (Fully
Competent) - or better to be eligible for an award. This plan shall not be a
guarantee of employment; employment may be terminated by either the Company or
Employee at any time and for any reason, subject to the terms and conditions of
the Employment Agreement. If Employee is terminated prior to the end of the plan
period for a reason other than death, disability or retirement (as noted in
Section 11), Employee shall not be entitled to any payment for that period.
7. Plan Metrics
The amount of Pre-Tax Net Income achieved in comparison to the planned level
shall determine all Performance Bonuses, if any. For illustrative purposes, the
following example is based upon a Plan Target for Pre-Tax Net Income of
$57,500,000 for the Annual Bonus Period. The Performance Bonus will be
calculated as a percentage of the Employee's base salary as noted in Exhibit 1.
For each subsequent Annual Bonus Period, the Pre-Tax Net Income achievements
shall be proportionately
Page 2 of 6
adjusted based on the planned level of Pre-Tax Net Income for each such Annual
Bonus Period. For purposes of plan calculation, the base salary effective date
will be January 1 of the Annual Bonus Period.
Exhibit 1 - Example of Incentive Plan Payout Levels
----------------------------------------------------------------------------------------------------------------------------------
Pre-Tax Net Income Incentive Target Incentive Range
----------------------------------------------------------------------------------------------------------------------------------
Pre-Tax Net Income below There will be no incentive payout at this level $0
$38,000,000
----------------------------------------------------------------------------------------------------------------------------------
Multiplier will be related to Pre-Tax Net Income achievement
Pre-Tax Net Income between against budget by a factor of 1:1 (e.g., 90% achievement = 90%
$38,000,000 and $57,499,999 of target). Range is 66.087% to 99.99% of target. $371,739 - $562,499
----------------------------------------------------------------------------------------------------------------------------------
2005 Pre-Tax Net Income Target = Target Incentive = 75% of Base Salary $562,500
$57,500,000
----------------------------------------------------------------------------------------------------------------------------------
Multiplier will be related to Pre-Tax Net Income achievement
Pre-Tax Net Income above against budget by a factor of 2.0:1, e.g., 110% budget
$57,500,000 achievement = 120% of target. Incentive caps at 300% of target
for Pre-Tax Net Income at 200% of budget. $562,501 - $1,687,500
----------------------------------------------------------------------------------------------------------------------------------
o No bonus will be earned if Pre-Tax Net Income is less than $38,000,000.
The target incentive is set at 75% of base salary ($562,500) for 100%
achievement of the Pre-Tax Net Income budget. For performance between 66.087%
and 99.99% of the planned target, the incentive will be interpolated (or
proportionately adjusted for different targets in later years) between $371,739
and $562,499 on a 1:1 performance ratio. For performance between 101% and 200%
of the planned target, the incentive will be interpolated (or proportionately
adjusted for different targets in later years) between $562,501 and $1,687,500
on a 2.0:1 performance ratio. The Maximum incentive payable at 200% of the
planned target is equal to 300% of the target incentive opportunity =
$1,687,500.
8. Discretion
The Compensation Committee has discretion to exclude from Pre-Tax Net Income
extraordinary, non-recurring gains and losses in the judgment of the
Compensation Committee, such as gains or losses caused by a labor strike, loss
of business due to Force Majeure, or other factors. In addition, the Pre-Tax Net
Income calculation shall include the following adjustments:
>> Executive Officer (as listed in the Company's Annual Report on Form
10-K) bonuses will be excluded from the Pre-Tax Net Income
calculation.
Page 3 of 6
9. Bonus Provision
The Employee may receive a Performance Bonus only if the required Pre-Tax Net
Income level is attained in the applicable Annual Bonus Period. No bonus payment
shall be made under this Incentive Plan unless the Compensation Committee has
certified, by resolution or other appropriate action in writing, that the amount
to be paid has been accurately determined in accordance with the terms,
conditions, and limits of this Incentive Plan. However, under special
circumstances, on recommendation of the Compensation Committee the Board may at
any time, at its sole discretion, award an annual bonus outside of the terms
specified in this document and the Executive Employment Agreement dated January
1, 2005.
10. Annual Review of Plan
The Incentive Plan will be reviewed on an annual basis allowing for updates or
revisions to be considered.
11. Death, Disability, and Retirement
If Employee is terminated prior to the end of the Term period due to death,
disability or retirement as determined by the Board of Directors, the Employee
or the beneficiary's estate shall, after determination of Pre-Tax Net Income
achieved for the applicable Annual Bonus Period, be entitled to receive payment
of a prorated portion of the award for the year.
12. Discontinuance, Suspension, or Amendment of the Plan
The Company may discontinue the Incentive Plan at any time, suspend the
Incentive Plan at any time or for any interim, or amend the Incentive Plan in
any respect. In particular, but without limitation, the Board of Directors shall
have the authority to amend or modify the Incentive Plan from time to time in
order to reflect amendments to or regulations promulgated under Section 162(m)
of the Code.
Notwithstanding the foregoing, in the event that any amendment or other
modification of or to the Plan would require stockholder approval in order to
continue the compliance of the Incentive Plan as a "performance-based" plan
under Section 162(m) of the Code, such amendment or modification shall be
contingent on the receipt of stockholder approval. However, no such action may:
>> Cause Employee to be deprived of any bonus previously awarded but
not paid;
>> Be effective in the fiscal year in which such action is taken unless
it is taken within the first three months of the fiscal year; or
>> Increase any award determined in accordance with the Incentive Plan.
13. Administration of the Incentive Plan
The Incentive Plan shall be administered by the Compensation Committee of the
Board of Directors. Actions of the Compensation Committee with respect to the
administration of this Incentive Plan shall be taken pursuant to a majority vote
or by written consent of a majority of its members. The Compensation Committee
shall have the sole authority to construe and interpret this Incentive Plan and
any agreements defining the rights and obligations of the Company and Employee
under this Incentive Plan, further define the terms used in his Incentive Plan,
and, subject to Section 12 hereof, prescribe, amend and rescind rules and
regulations relating to the administration of this Incentive Plan.
Page 4 of 6
This Incentive Plan is intended to qualify as a "performance-based" plan as
described in Section 162(m)(4)(C) of the Code, and thereby secure the full
deductibility for federal income tax purposes of bonus compensation paid to
persons who are "executive officers" of the Company, or who are "covered
employees" of the Company or its subsidiary or affiliated corporations under
Section 162(m)(3) of the Code.
The Incentive Plan will be administered by the Compensation Committee of the
Company's Board of Directors consisting entirely of three or more persons who
are "outside Directors" within the meaning of Section 162(m) of the Code. The
Compensation Committee is hereby vested with full powers of administration,
subject only to the provisions set forth herein. The Compensation Committee
shall report all actions taken by it to the Board of Directors.
14. Nonassignment
The interest of Employee in the Incentive Plan is not assignable either by
voluntary or involuntary assignment or operation of law (except that, in the
event of death, earned and unpaid amounts shall be payable to the legal
successor of an Employee).
15. Indemnification
No employee, member of the Compensation Committee or Director of the Company
will have any liability for any decision or action if made or done in good
faith, nor for any error or miscalculation unless such error or miscalculation
is the result of his or her fraud or deliberate disregard of any provisions of
the Incentive Plan. The Company will indemnify each Director, member of the
Committee and any employee acting in good faith pursuant to this Incentive Plan
against any loss or expense arising therefrom.
16. Limitations; Participation in Other Plans
This Incentive Plan is not to be construed as constituting a contract of
employment or for services. Nothing contained herein will affect or impair the
Company's right to terminate the employment or other contract for services of
Employee hereunder, or entitle Employee to receive any particular level of
compensation. The Company's obligation hereunder to make awards merely
constitutes the unsecured promise of the Company to make such awards from its
general assets, and Employee will have no interest in, or a lien or prior claim
upon, any property of the Company. Nothing herein nor the participation by
Employee shall limit the ability of Employee to participate in any other
compensatory plan or arrangement of the Company, or to receive a bonus from the
Company other than under this Plan.
Page 5 of 6
The parties execute this Executive Annual Incentive Plan as of the date stated
above:
EMPLOYEE SUPERIOR INDUSTRIES INTERNATIONAL, INC.
By: By:
----------------------------- ----------------------------------
Name: Steven J. Borick Louis L. Borick
Title President and CEO Chairman of the Board
By:
----------------------------------
Bond Evans
Chairman, Compensation Committee
NOTICE ADDRESS:
Superior Industries International, Inc.
7800 Woodley Avenue
Van Nuys CA 91406
Page 6 of 6
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
REVOCABLE PROXY
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
PROXY FOR ANNUAL MEETING OF
SHAREHOLDERS -- MAY 13, 2005
The undersigned hereby appoints R. JEFFREY ORNSTEIN and DANIEL L. LEVINE,
and each of them, the attorney, agent and proxy of the undersigned, with full
power of substitution, to vote all stock of SUPERIOR INDUSTRIES INTERNATIONAL,
INC., which the undersigned is entitled to vote at the Annual Meeting of
Shareholders of said corporation to be held at the Airtel Plaza Hotel, 7277
Valjean Avenue, Van Nuys, California 91408 on Friday, May 13, 2005 at 10:00
A.M., and at any and all postponements and adjournments thereof, as fully and
with the same force and effect as the undersigned might or could do if
personally thereat.
With- For All
For hold Except
1. The election as directors. [_] [_] [_]
Nominees: Louis L. Borick
Steven J. Borick
Raymond C. Brown
INSTRUCTION:To withhold authority to vote for any individual nominee, mark "For
All Except"and write that nominee's name in the space provided below.
--------------------------------------------------------------------------------
For Against Abstain
2. Approval of an Incentive Bonus Plan [_] [_] [_]
for Steven J. Borick.
PLEASE CHECK BOX IF YOU PLAN TO ATTEND THE MEETING. [_]
THE PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS INDICATED, THE
PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES AS DIRECTORS AND FOR THE
APPROVAL OF PROPOSAL 2.
THIS PROXY ALSO CONFERS DISCRETIONARY AUTHORITY ON THE PROXIES TO VOTE AS TO ANY
OTHER MATTER THAT IS PROPERLY BROUGHT BEFORE THE ANNUAL MEETING THAT THE BOARD
OF DIRECTORS DID NOT HAVE NOTICE OF PRIOR TO FEBRUARY 26, 2005.
------------------------
Please be sure to sign and date | Date |
this Proxy in the box below. | |
--------------------------------------------------------------------------------
| |
| |
-----------Stockholder sign above----------Co-holder (if any) sign above-------
--------------------------------------------------------------------------------
Detach above card, sign, date and mail in postage paid envelope provided.
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
--------------------------------------------------------------------------------
PLEASE ACT PROMPTLY
SIGN, DATE &MAIL YOUR PROXY CARD TODAY
--------------------------------------------------------------------------------
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
----------------------------------
----------------------------------
----------------------------------